California lawmakers approve budget to fund rail, preschool

SACRAMENTO Calif. (Reuters) - California lawmakers approved a $156.4 billion budget on Sunday, sending the plan that includes funding for a controversial high-speed rail project and preschool education for low-income children to Democratic Governor Jerry Brown to be signed.

The state Senate voted 25-11 two hours after the Assembly approved the spending plan, a compromise deal that sets aside money for a so-called rainy day fund in line with Brown's vision of fiscal restraint.

"This budget is not perfect, but after a very dark time, we are stepping out into the light," said Senator Mark Leno during floor deliberations.

The vote followed months of political wrangling among Democrats seeking to restore spending on social programs cut during the recession.

A budget deal was reached on Friday and the vote came ahead of a deadline of midnight on Sunday to pass it.

The budget must be signed into law by Brown, who last year used his line-item veto to kill some measures. On Friday, he praised the legislature for "a solid and sustainable budget" barely bigger than the $156.2 billion he had proposed in May.

California faces the upcoming fiscal year, which begins July 1, in good financial shape, thanks to new taxes approved by voters and the resurgent economy. When Brown took over in 2011 after serving two terms from 1975 to 1983, the state faced an 18-month budget gap of $25 billion.

Brown's high-speed rail project, a $68 billion effort opposed by Republicans, will receive $250 million in funding from the state's cap-and-trade program. The state collects a fee after polluters buy and sell their rights to emit carbon into the air.

The budget lawmakers included a requirement that $1 billion of educational funds be used for specific purposes, while limiting the dollar amount schools are allowed to keep in their coffers.

As part of a compromise with Brown, lawmakers negotiated additional commitments for cap-and-trade funds, including money for affordable housing, mass transit and clean energy projects.

Other compromises included an expansion of public pre-kindergarten for four-year-olds from low income families - a priority of Senate President pro-tem Darrell Steinberg, a Democrat who represents Sacramento.

They include implementing national Common Core curriculum standards, vocational education, and assistance for school districts with a high percentage of disadvantaged students, said Assembly member Nancy Skinner, a Berkeley Democrat.